Hippo Holdings Inc. Q4 FY2024 earnings call

• Acknowledged the impact of Los Angeles wildfires in January, with preliminary pretax cat losses estimated at ~$42M, net of reinsurance, subrogation, and California FAIR Plan assessment. Sold subrogation rights for the Eaton portion of the wildfires. - 2024 was the most successful year in the company's history, with HHIP gross loss ratio improved by nearly 30 percentage points, achieved positive adjusted EBITDA in Q4, and nearly doubled annual revenue. - Insurance as a Service segment had 2024 revenue growth >40% while maintaining quality, and focused on building a foundation for the Hippo homeowners insurance program, particularly the new homes channel. - Outlook for 2025 includes being well-positioned to improve operating income vs 2024 results and on track to turn net income profitable by the end of 2025.

Hippo home insurance program segment: In Q4 2024, total generated premium (TGP) declined 8% year-over-year due to managing down exposure to high cat geographies. However, HHIP gross loss ratio improved 3 percentage points year-over-year to 50%, the non-PCS loss ratio improved 20 percentage points to 43%, and the net loss ratio came in at 60%, an improvement of 46 percentage points versus Q4 of 2023. Insurance as a Service segment: TGP grew 22% year-over-year. Revenue growth was driven by premium growth from existing programs, some with slightly higher risk retention, and the launch of a few new programs expected to be growth drivers in 2025. Revenue contribution details: The 8% decline in Hippo home insurance program segment TGP was partially offset by 22% growth in Insurance as a Service segment TGP.

• 2024 Q4: Delivered positive adjusted EBITDA of $8.5M, revenue annual run rate ~$410M, on track to exceed Investor Day revenue target. - 2025 guidance: Raised revenue guidance to $465M, expects positive net income by Q4 2025, projects HHIP gross loss ratio to be less than 60% in Q4 2025 with a PCS cat load of ~15%, and HHIP net loss ratio to be less than 67% in Q4 2025. Also expects continued improvements in operating leverage despite higher expected revenue.

• Catastrophic events like the Los Angeles wildfires can impact pretax losses, and the company needs to consider recoveries from reinsurance and subrogation. - Changes in the reinsurance market and structure could affect loss ratios and overall financial performance.

Q: Tommy McJoynt-Griffith asked about the strategy behind selling the Eaton Fire subrogation rights, impact on reinsurance protection for the rest of the year, and full year 2025 bottom line guidance.

A: Stewart Ellis said the sale was not due to liquidity needs but based on comparing economic value of proceeds now vs pursuing claims later. Reinsurance renewals for Hippo program are Jan 1, and the loss barely impacted reinsurance protection. Rick McCathron mentioned they'll provide more detailed 3-year guidance on June 12.

Q: Andrew Andersen asked about California exposures, derisking in California, IAS competitive environment, and sales and marketing spend.

A: Rick McCathron said losses from wildfires were from legacy HHIP portfolio, doesn't change outlook on California as new home business is diversified. IAS has a full pipeline with high-quality partners, and Stewart Ellis noted they are disciplined in sales and marketing spend while seeing opportunities to grow with high return.